Economist Morici: Obama's Minimum Wage Hike Will Cost Jobs

A leading economist says the Congressional Budget Office is correct when it says President Barack Obama's increase in the minimum wage for federal workers will lead to massive job losses.

"In the past when we've raised the minimum raise, it's merely been to catch up with inflation," Peter Morici, a professor of international business at the University of Maryland, told "The Steve Malzberg Show" on Newsmax TV.

"But the president is talking about a 40 percent increase. Going to McDonald's is going to be like going to the Automat. They won't be able to afford their people out there for you, or they'll be closing McDonalds," he said Wednesday.

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The increase, to $10.10 per hour for federal workers, will also have a ripple effect, Morici says.

"What they didn't tell you, though, is if you raise the wages of 16 million Americans by $4 to $5 an hour, someone's going to be charging higher prices and those wages won't be worth what they're worth today," he said.

"So, a lot of this will be dissipated by inflation. What's more, the economy will grow more slowly and Mr. Obama will have less real dollars to pay all of his welfare programs.

"The programs that these people depend on, like Medicaid and food stamps and so forth, will be under increasing stress because, guess what, the president has discovered he can't cut defense any more."